Trade Liberalization and Economic Growth in Pakistan

The main objective of this research paper is to analyze the trade liberalization and economic growth in Pakistan. Time series data was utilized for the period from 1990 to 2016. It was collected from World Bank and Pakistan Economic Survey. The dependent variable was Gross Domestic Product(GDP) while Foreign Direct Investment, Real Import, Real Export, Labor Force, and Gross Capital Formation were independent variables. The ADF's Unit Root Test was used to check the stationarity of variables. We used Auto Regressive Distributed Lagged (ARDL) Model to check long run and short run relationship between variables. The results show that export is positively is positively and import is negatively related to GDP in the short run while trade liberalization has positive relation with economic growth in the long run in Pakistan.